Amazon scooped up data from its own sellers to launch competing products • Hacker News Board

Re: Amazon scooped up data from its own sellers to launch competing products

#351

Post by PaulDavisThe1st » Thu, Apr 23, 2020, 6:46 PM UTC

econcon wrote: post #313

PaulDavisThe1st wrote: post #299

Earlier quoted context omitted.

Not highest volume. Highest gross profit (volume * margin). And how would you ever know either of these two (volume, margin) if you were an arbitrary 3rd party? Amazon doesn't need to branch out into every single long tail product to cause severe disruption to a retail sector that is often predicated on low single digit margins.

How does Amazon know margin? Amazon know volume, Amazon goes to suppliers on alibaba and gives them the quantity they require and then Amazon figures out what margin they'll be making if they sell it at the same or lower price than the original seller.

If you can't see volume, you can't estimate profit, and you can't differentiate which products are worth considering as a primary seller.

Start with volume as a suggestion of which products to investigate for purchase price with sellers. If you can get the "right" price with the "appropriate" volume, start selling the product direct.

Also, at Amazon scale, you can estimate margin by looking at price variation over time and throwing in some well tested assumptions.

Re: Amazon scooped up data from its own sellers to launch competing products

#352

Post by joyj2nd » Thu, Apr 23, 2020, 6:46 PM UTC

TimSchumann wrote: post #332

joyj2nd wrote: post #307

Earlier quoted context omitted.

I had a few bad experiences with Amazon. 1st I got an item from a fraudulent 3rd party shipper. Did not get my money back and amazon claimed they don't know his identity 2nd Packet got stolen. Amazon claimed based on statistical analysis this packet is assumed to have reached me. Delivered to "mailbox". Paid with CC, made a charge back, closed my account. You know what is a pretty good competitor? eBay. As a business…

> You know what is a pretty good competitor? Competitor on what vector? Speaking from a US-centric viewpoint here, but my thoughts; * Distribution & Warehousing - Walmart & Costco * Sales & Advertising - Google & Facebook A few notable online storefronts that are independent and I use frequently are B&H Photovideo and Newegg. Realistically though the options I listed above are the only companies I see having the scal…

Yes, sorry, I meant from a buyer perspective.

As a side node: I am actually thinking of buying a tiny bankrupt travel equipment company. Friends advised against it because of "Amazon essentials". I would not sell on Amazon but it is a strong argument.

Maybe someone has some words of wisdom regarding to this.

Re: Amazon scooped up data from its own sellers to launch competing products

#353

Post by libertine » Thu, Apr 23, 2020, 6:47 PM UTC

odysseus wrote: post #296

libertine wrote: post #247

Earlier quoted context omitted.

I understand your idea, but I still think they are and should be defined as marketplaces, with a scrutiny any marketplace should get. The first reason is, Amazon isn't doing much curation (if any), due to their size they can't do proper curation, and bots are terrible at it (either based on keywords or reporting). This is proven by counterfeit items being sold, listings being stolen/manipulated, biased report systems…

What kind of "full data" would you want from the customer? Earlier, you mentioned their name. Why can't the customer's transaction be as anonymous as possible, if they choose to be? It seems as if Amazon, likely prodded by the GDPR and CCPA, is limiting the personal information they share with third parties. I think that's a good thing, for the consumer at least.

That's a slippery slope: is the person the seller customer, or Amazon's customer?

Their name was an example of something required to provide feedback, make amendments, or any kind of engagement that's required with that customer.

Anonymity is one of the reasons review manipulation thrives on Amazon.

Honestly I doubt it was due to GDPR/CCPA, or user privacy concerns, and more turning FBA into a pipeline of homogeneous suppliers that race to the bottom.

Re: Amazon scooped up data from its own sellers to launch competing products

#354

Post by shrewduser » Thu, Apr 23, 2020, 6:48 PM UTC

sacks2k wrote: post #171

I saw this happening a decade ago, but I had no real proof. I had a profitable Amazon store in 2010. I found niche products that Amazon didn't sell. As soon as I started getting traction on any one product, Amazon would start undercutting me, and my sales would drop to almost zero over the course of a couple of weeks. I had near 100% feedback and I had a single customer complaint that I sold them the wrong product. W…

I don't see how this is legal,

Personally i don't think you should be able to run the market and compete in it at the same time.

People talk a lot about other companies but the one i'm most worried about for stamping out startups and holding the economy back is amazon.

Re: Amazon scooped up data from its own sellers to launch competing products

#355

Post by xwdv » Thu, Apr 23, 2020, 6:49 PM UTC

sacks2k wrote: post #171

I saw this happening a decade ago, but I had no real proof. I had a profitable Amazon store in 2010. I found niche products that Amazon didn't sell. As soon as I started getting traction on any one product, Amazon would start undercutting me, and my sales would drop to almost zero over the course of a couple of weeks. I had near 100% feedback and I had a single customer complaint that I sold them the wrong product. W…

Come to Shopify.

Re: Amazon scooped up data from its own sellers to launch competing products

#356

Post by aleksaxyz » Thu, Apr 23, 2020, 6:50 PM UTC

sneak wrote: post #298

marcosdumay wrote: post #287

Earlier quoted context omitted.

You know, at some point people will discover that "online market" is something important enough for governments to regulate.

I think this is just a special case of “online communication”. It’s illegal for the phone company to arbitrarily suspend your service for what (legal things) you say over the phone. It’s legal for Twitter or Amazon or Etsy or Twitch or Discord or YouTube. I recently got suspended by Twitter after using it daily for 12 years and in addition to not being able to send new tweets or DMs (or do data backup/takeout), I als…

Can I see the laws that affect phone companies and free speech? That's an interesting observation, and does parallel Twitter/YouTube/etc, so I'd like to see the wording for it.

Re: Amazon scooped up data from its own sellers to launch competing products

#357

Post by 1propionyl » Thu, Apr 23, 2020, 6:52 PM UTC

closetohome wrote: post #312

xbmcuser wrote: post #270

Earlier quoted context omitted.

To me that is not a problem as long as they are not giving their own products better placement. If 50 brands of cornflakes and in them target has a 10 white-label brands that is not a problem but if all 10 white-label brands are put in front of other brands ie first few in search results then it is a problem.

In all seriousness, not giving your own brands prominent placement would be ignoring the benefits of vertical integration, leaving money on the table, and violating your fiduciary duty to stockholders.

> violating your fiduciary duty to stockholders

The idea that corporate directors (of whichever kind) have an legal obligation to maximize profits/shareholder value is a myth. Taken directly from Alito's (non-dissenting) opinion in Hobby Lobby:

"While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so."

Additionally, even if there were such a requirement, it would be toothless. The corporate directors of a company facing criticism from its shareholders that it is not maximizing profits (in the short-term) could simply retort that they are pursuing a strategy that maximizes profits in the long-run, and that investors should look elsewhere for short-term gains.

As a practical example, consider any company that pursues more environmentally sound practices, or tries to source materials more ethically. By doing more than the bare minimum, they are surely cutting into short-term profits, however they may in the process be building a more resilient and popular brand that profits more in the long-run.

Re: Amazon scooped up data from its own sellers to launch competing products

#358

Post by drc500free » Thu, Apr 23, 2020, 6:53 PM UTC

darkerside wrote: post #340

CodeCube wrote: post #290

So many comments about, "doesn't everyone know they do this?", and "everyone does this!" I say there should be an explicit difference between "running a platform", and "selling on a platform", and never should the two meet. By "platform" here, and in the context of selling stuff online or IRL, I mainly mean that the store should never compete with their suppliers ... it's madness and unethical. If everyone can get a…

Such a difficult thing to regulate. The instant you stop Amazon from selling on its own platform, they will open a subsidiary Amazon Retail, which is a favored customer on their platform. Whatever new regulation you can come up with, there will be armies of corporate lawyers ready to satisfy your requirements while still capturing that audience who is ready (and wants) to be captured by a platform-branded generic opt…

This seems a bit defeatist. We've successfully regulated against vertical integration in the past.

Re: Amazon scooped up data from its own sellers to launch competing products

#359

Post by TimSchumann » Thu, Apr 23, 2020, 6:54 PM UTC

shrewduser wrote: post #354

sacks2k wrote: post #171

I saw this happening a decade ago, but I had no real proof. I had a profitable Amazon store in 2010. I found niche products that Amazon didn't sell. As soon as I started getting traction on any one product, Amazon would start undercutting me, and my sales would drop to almost zero over the course of a couple of weeks. I had near 100% feedback and I had a single customer complaint that I sold them the wrong product. W…

I don't see how this is legal, Personally i don't think you should be able to run the market and compete in it at the same time. People talk a lot about other companies but the one i'm most worried about for stamping out startups and holding the economy back is amazon.

> I don't see how this is legal, Personally i don't think you should be able to run the market and compete in it at the same time.

It may be, it may not be. I don't know, I am not a Lawyer nor do I play one on the internet.

What I do know is that to date no individual, or collective, has had the financial or political will to test any of this in court.

I suspect this is largely a positive feedback loop whereby any entity that has the financial or political capital to do so and stand a reasonable chance of winning has done the calculus and come to the conclusion that setting said legal precedent would do their own businesses more harm than it would net them in value from Amazon.

Until that changes, meet the new boss same as the old boss.

Re: Amazon scooped up data from its own sellers to launch competing products

#360

Post by joezydeco » Thu, Apr 23, 2020, 6:57 PM UTC

replicatorblog wrote: post #330

ardy42 wrote: post #176

Earlier quoted context omitted.

> Stating the obvious I guess. All retailers do this and create their own white-label brands to squeeze profit from well-performing categories. Target, for instance, is very upfront about it and they have like a gazillion white-label brands that compete in hundreds of categories, which makes it very gray for the customer. IIRC, many traditional white label brands are actually manufactured by the name brands themselve…

That is largely not the case. I spent ten years making private label medical devices for CVS, Kroger, Target, and dozens of other stores. There tend to be specialist manufacturers who fill the store brand niches. E.g. in pharma, close to 90% of the pills, tabs, and liquids sold in front of the pharmacy counter are made by one company, Perrigo, whose entire model is predicated on being a store brand supplier. I don't…

And I can give an opposite case. I used to work for a large 1st-tier manufacturer of consumer batteries (hearing aid, AA, 9V, etc etc).

We were constantly competing with the other manufacturers for the Wal-Mart, Walgreens, CVS, etc white label brands. It was increased volume for our plants and they would usually suck up surplus supply.

The catch was that your contract was continually up for renewal and you had to beat the others on price and other criteria. After all, nobody else would know that the rack at Wag's was half-bunny and half-coppertop, right?

It was also a headache because defective parts and customer complaints counted against you hard. We actually tested our white label products more than the name brand SKUs.